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Can Nasty Gal Be Saved?

Fastest-fashion player Boohoo is doubling down on its effort to bring Nasty Gal back from the brink after acquiring the troubled brand’s intellectual property for a song in February. But is it too late for a turnaround?
Source: Nasty Gal
  • Lauren Sherman

NEW YORK, United States — "DON'T CALL IT A COMEBACK." So read the "Save the Date" for June 1's Governors Ball pre-party, the preamble to the weekend-long music festival that takes place annually on New York City's Randall's Island. That's because Nasty Gal — the harrowed label sponsoring the evening's festivities, which are scheduled to include an appropriately trendy Kitty Kash DJ set and a performance by Tinashe — never really went away.

At least not technically. But the fate of the aggressively hip, made-for-millennials apparel brand has been in question for some time. In November 2016, after failing to properly scale with its $65 million in venture capital funding, Nasty Gal famously filed for Chapter 11 bankruptcy protection, while founder and figurehead Sophia Amoruso not-so-quietly moved on to a new venture, transforming #Girlboss — the name of her first memoir — into a major media platform.

Many wondered if the Nasty Gal moniker would survive the public maiming, and even more so after UK fashion e-tailer Boohoo purchased its intellectual property and customer databases for a bargain-basement price of $20 million in February 2017.

Boohoo has earned favour with shareholders for turning out ultra-fast fashion that can go from development to shopping cart in less than a month, even more quickly than H&M or Zara. (The Boohoo executive team's deep experience in sourcing and production has given them a leg up amongst competitors.) In its fiscal year ending February 28, 2017, Boohoo's net revenues increased 51 percent year over year to roughly $380 million (£294.6 million), with profits up 97 percent to $40 million (£30.9 million) and gross margins of almost 55 percent, equivalent to that of rival H&M.


While Boohoo’s extraordinary growth has attracted interest from major investors like Goldman Sachs — which recently published a note correlating its supply-chain lead time and sales growth — the company believes there is room for more than one brand in its portfolio. However, unlike many of its competitors, which either acquire or launch brands that market to distinctly different aesthetics or age groups, Boohoo has zeroed in on the young-and-hungry sweet spot between Generation Z and Millennials.

The ambition for the Boohoo Group is to dominate e-commerce at the youth-end of the market.

“The ambition for the Boohoo Group is to dominate e-commerce at the youth-end of the market,” explains joint chief executive Carol Kane. Before it took on Nasty Gal in February 2017, the Manchester-headquartered retailer acquired a 66 percent stake in UK label Pretty Little Thing for a little over $4 million (£3.3 million).

However, Kane says that Boohoo isn’t actively looking to acquire more companies. At least not at the moment. Pretty Little Thing — which primarily sells “going out” club clothes aimed at the Kylie Jenner demographic — was started by the son of Boohoo co-chief executive Mahmud Kamani. (As the umbrella brand, Boohoo is the most inclusive and more akin to H&M or Zara, selling product across categories from childrenswear to menswear.) When Boohoo went public in 2014, plans to acquire Pretty Little Thing were already underway.

As for Nasty Gal? Boohoo had walked away from acquisition conversations with the Los Angeles-based brand a few years back, but November’s unique circumstances made it worth a second look.

“When Nasty Gal came along, that was rather opportunistic,” Kane says. “Looking at the US market where we’ve already seen healthy growth, if we were to grow the US proposition, [acquiring Nasty Gal] made perfect business sense.” In its latest fiscal year, Boohoo’s US revenue reached $52 million (£40.4 million) in revenue, almost 14 percent of the overall business.

And just as it moves product faster than the average fast fashion chain, Boohoo has quickly ramped up its Nasty Gal efforts. Two weeks after the deal went through, the website was already up and running, with 400 pieces for sale on the site. Today, there are 1,200.

Where Nasty Gal faltered in production, planning and logistics, Boohoo has proven masterful.

The parent company has also been careful to maintain Nasty Gal’s California roots, retaining several brand-side employees who have been there since long before the bankruptcy. This includes creative director Brett Spencer (an eight-year veteran), a marketing director and an editorial director, as well a several members of their teams. Altogether, there are roughly 15 employees based in LA, and that number will grow, according to Kane. There are also about 45 employees dedicated to Nasty Gal in the e-tailer's Manchester headquarters, where sourcing, design and operations have been centralised, allowing the brand to benefit from the same speed-to-market as Boohoo and Pretty Little Thing.

The marketing, too, is in full swing. Stateside, besides the Governors Ball pre-party, Nasty Gal also recently hosted a press day in Los Angeles, inviting editors and influencers to preview the new take on the brand. And along with implementing traditional digital acquisition tools — paid keyword search, etc. — it launched its first commercial, which can be viewed on YouTube in the US.


However, in the UK, Ireland and Australia, that same clip has aired as a 30-second television spot, indicating the great international opportunity Boohoo sees for the brand. (Shiny-and-new Nasty Gal advertisements are also splayed all over the London tube.) “It’s been very exciting to take that cool LA brand international,” Kane says. Especially now that the distribution is handled the UK, offering same-day shipping within the country and two-day shipping to the US. “We feel that we’re in a much better position to accelerate growth.”

But will consumers once again glom on to Nasty Gal the way they did the first time around? After all, it was a rabid fanbase that made it a success in the first place. Where Nasty Gal faltered in production, planning and logistics, Boohoo has proven masterful.

And yet, even if Boohoo manages to properly re-acquaint former fans, Nasty Gal is now missing one key ingredient: Amoruso. The company’s brand awareness began to dwindle when the founder distanced herself from its mission. Her ability to understand and connect with that consumer was the magic of Nasty Gal. Does Boohoo possess the requisite fairy dust to make it work? Only the numbers will tell.

Related Articles:

Boohoo Enters Bid for Nasty GalOpens in new window ]

Nasty Gal: What Went Wrong?Opens in new window ]

A New Age Zara? Boohoo’s Faster Fashion Fuels 260 Percent ReturnOpens in new window ]

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